DEALING WITH A MOTOR VEHICLE – GENERAL AND INITIAL ACTIONS
Unlike most other property of an insolvent, a motor vehicle is a potential source of liability in that there are obligations attached to the ownership and use of a vehicle.
As a result of this, the official receiver does not have the luxury of time when dealing with a motor vehicle and should, in all cases, deal with motor vehicles both proactively and expeditiously, whilst ensuring that he/she and the estate are protected from potential liabilities and from losses to the value of the vehicle as an asset.
The official receiver should, of course, only deal with a vehicle that is property of the insolvent.
Generally, it will be appropriate to rely on a director’s or bankrupt’s account if he/she maintains that the company/he/she owns a motor vehicle. Where there is doubt, the official receiver should look to indicators such as the identity of the insurer of the vehicle, the identity of the registered keeper (see paragraph 31.2.10) of the vehicle and, significantly, the source of the monies when the vehicle was purchased and/or the contract under which it was purchased.
It is important that the official receiver establishes the current whereabouts of a vehicle owned by an insolvent as soon as possible after the making of the order, as this will greatly assist in protecting the vehicle. Ideally, this should be when conducting the initial enquiries immediately after the making of the order or on first contact with the director/bankrupt, whichever is the sooner.
The official receiver should also establish, at that stage, the following details regarding the vehicle:
There are grounds under which a motor vehicle may be treated as exempt property in a bankruptcy [note 1]. The considerations for the official receiver, as trustee, when deciding if a vehicle should be treated as exempt property are dealt with in Chapter 30, Part 6.
Where a motor vehicle is treated as exempt property, it will not be necessary to deal with the motor vehicle as property of the estate though, of course, the vehicle should be protected until the decision regarding exemption is made.
A third party, such as a finance company, leasing company or hire company may have an interest in a vehicle used by the insolvent. Depending on the nature of the interest, this is likely to have an affect on the value of the property to the estate, will affect whether it forms property of the estate at all and may limit the extent to which the official receiver, as liquidator or trustee, will be able to realise the vehicle to the benefit of the estate.
Third party interests are dealt with in Part 2 of this chapter.
Where the director or bankrupt reports that the company’s/his/her vehicle has been stolen prior to the making of the insolvency order the official receiver should obtain a full account of the circumstances of the theft and also have the director or bankrupt provide a copy of the crime report showing the crime reference number. These actions are to establish that the theft is real and not an attempt to put the vehicle out of reach.
Any monies due under a related insurance claim should be secured for the estate and, where a claim has not yet been made, the official receiver should make a claim for the benefit of the estate. This is so even if the vehicle would have been treated as exempt property, if not stolen (see Chapter 30, paragraph 30.156). In addition, the official receiver should reclaim any outstanding tax on the vehicle, using DVLA form - available by phoning DVLA Customer Enquiries Helpline on.
A stolen vehicle should not be disclaimed (see paragraph 31.2.66), until any related insurance claim has been made. In the meantime the reporting of the theft of the vehicle should be sufficient to protect the official receiver from any liability in relation to the vehicle.
On application to the Driver and Vehicle Licensing Agency (DVLA), the DVLA will issue a vehicle with a registration number [note 2], unique to that vehicle, which is shown on the front and rear of that vehicle (rear only for most motorcycles) and will be detailed on the vehicle registration certificate (V5C) (see paragraph 31.2.7) [note 3].
The V5C vehicle registration certificate (also commonly known as the ‘logbook’) records details of the vehicle such as its vehicle identification number (VIN), make, model and registered keeper (see paragraph 31.2.10).
The V5C also contains ‘tear-off’ slips to be used to notify DVLA of events affecting the vehicle – primarily the transfer of the vehicle to a new keeper (see paragraph 31.2.54).
The registered keeper of a motor vehicle is the person who keeps the vehicle on the public road and has responsibility to tax and register the vehicle [s30]. This is not necessarily the owner of the vehicle, but the identity of the registered keeper and the identity of the owner are usually the same. As outlined at paragraph 31.2.10, the identity of the registered keeper is shown on the V5C, though in the absence of a V5C the DVLA can provide the details of the registered keeper to the official receiver (see paragraph 31.2.11).
The official receiver can establish who was the registered keeper of the vehicle at a specific date by submitting a request to the DVLA using form VQ615 (see paragraph 31.2.12). Where the enquiry seeks to establish whether the bankrupt has an historic interest in the vehicle, this should be explained in a covering letter, using the template attached to this chapter as Annex A.
The form VQ615 (see paragraph 31.2.11) must be completed in full using black ink and in capital letters. Box one of the form requires the official receiver’s data protection registration number - a list of the numbers for individual official receivers is available on the Technical Section intranet site under ‘official receivers – data protection registration numbers’. It is also important that the full office address is used rather than a PO Box number. An example of the completed form is available at Annex B to this chapter.
The completed request form should be sent (along with a certified copy of the bankruptcy/winding up order) to Vehicle Record Enquiries (VRE), DVLA, Swansea SA99 1AJ, there is no fee payable for this service. The DVLA will no longer accept searches submitted on form VQ4 or on Insolvency Service headed paper.
Form VQ615 is available through the DVLA stores department in pads of 50 forms each. A request for forms needs to be made in writing on headed paper by fax to 01792 783 525, stating how many pads are required.
Where a vehicle is an asset of an insolvent estate it is important to establish the position with regard to the insurance of the vehicle. As a minimum, the official receiver should seek to obtain the information outlined in Chapter 49, paragraph 49.20.
Where the details of the insurance company/broker are known, the official receiver should notify the insurance company of the insolvency, confirm with that company that the insurance is still in place and ask the company to note the official receiver’s interest in the policy in its records.
(Amended February 2014)
If the insolvent does not have cover or has cover that is insufficient (for example, third-party only cover), then the official receiver should effect his/her own insurance using the facility provided for by Willis (see Chapter 49, Part 3).
If the vehicle is in the custody of the official receiver then it will not be necessary to effect separate insurance as the scheme operated by Willis provides blanket coverage in these circumstances (see paragraph 49.13).
The official receiver should ensure that the value of the motor vehicle is sufficient to meet the insurance premium. Once the motor vehicle has been sold or otherwise disposed of the official receiver should cancel the policy in accordance with the guidance in paragraph 49.27B.
With limited exceptions (primarily relating to vehicles used in connection with agriculture [note 4]), road tax (properly called Vehicle Excise Duty) is payable on every vehicle registered in the UK and used on or kept on the public road [note 5]. The rate of tax varies depending on the type of vehicle and the level of emissions of that vehicle and is payable in advance for periods of 6 or 12 months. When a vehicle is sold, or otherwise disposed of, it is possible to reclaim any tax paid for the unexpired portion of the tax (see paragraph 31.2.70).
If the vehicle is not kept or used on the public road, the registered keeper is required to inform the DVLA of this fact by completing a Statutory Off Road Notification (SORN) (see paragraph 31.2.16), following which the vehicle will not be subject to taxation.
The DVLA carry out an automatic check of all registered vehicles and if any vehicle is untaxed and not subject to a SORN, the DVLA will issue an automatic penalty of £80.
The official receiver should check that any vehicle owned by the insolvent is taxed or subject to a SORN.
The registered keeper is required annually to declare officially that a vehicle is kept off-road, by completing a SORN.
In no circumstances should official receivers’ staff drive a motor vehicle belonging to an insolvent estate. If the vehicle needs to be moved – for example, to a place of safety – agents should be instructed as a matter of urgency, with the costs being a charge on the estate.
The vast majority of vehicles encountered by the official receiver will be small passenger vehicles or light goods vehicles owned, and operated by a bankrupt. The advice in this Chapter is equally applicable to vehicles owned and operated by a company or bankrupt on a commercial basis. Paragraphs 31.2.19 to 31.2.21 apply particularly to commercial vehicles.
Where the insolvent is the owner of a vehicle that exceed 3.5 tonnes (a heavy goods vehicle – HGV) or was a vehicle used to carry more than eight passengers (a public service vehicle – PSV), the insolvent will have been required to obtain a standard operators licence.
A licence is normally issued for a period of five years and gives details of each vehicle and trailer covered by it. Licences are issued by the Traffic Commissioner (http://www.dft.gov.uk/topics/tpm/traffic-commissioners/). Discs for display in each vehicle are also issued. Both the licence and the discs should be recovered by the official receiver as these documents may reveal undisclosed vehicles (see paragraph 31.2.20).
Once the standard operator’s licence is recovered (see paragraph 31.2.19), the official receiver should check the details on the licence to ensure that all listed vehicles and trailers can be accounted for.
Where the holder of a standard operators licence (see paragraph 31.2.19) is subject to an insolvency order, the official receiver should inform the Traffic Commissioner responsible for the area of operation of the making of the order. The insolvent’s licences and discs (see paragraph 31.2.19) should be returned to the local traffic area office (http://www2.dft.gov.uk/pgr/roads/tpm/trafficcommissioners/trafficareaofficescontactdetails.html), along with a request that a refund be issued for any unexpired portion of the licence. It is not possible for a licence to be transferred to another party.
Where a disc is not recoverable, the traffic area office can usually accept written confirmation from the official receiver of its loss, and issue a refund.